TORONTO, Aug. 8, 2019
/CNW/ - (TSX: CGX) - Cineplex Inc. ("Cineplex") today released its
financial results for the three and six months ended June 30, 2019. Unless otherwise specified,
all amounts are in Canadian dollars.
Second Quarter Results
|
|
|
|
|
2019
|
2018
|
Period over
Period
Change (i)
|
Total
revenues
|
$
|
439.2
|
million
|
$
|
409.1
|
million
|
7.4%
|
Theatre
attendance
|
17.0
|
million
|
17.3
|
million
|
-1.7%
|
Net
income*
|
$
|
19.4
|
million
|
$
|
24.4
|
million
|
-20.4%
|
Box office
revenues per patron ("BPP") (ii)
|
$
|
11.13
|
|
$
|
10.82
|
|
2.9%
|
Concession
revenues per patron ("CPP") (ii)
|
$
|
7.04
|
|
$
|
6.59
|
|
6.8%
|
Adjusted EBITDA
(ii)
|
$
|
112.2
|
million
|
$
|
67.8
|
million
|
65.5%
|
Adjusted EBITDAaL
(ii) (iii)
|
$
|
68.1
|
million
|
$
|
63.7
|
million
|
6.9%
|
Adjusted EBITDAaL
margin (ii) (iii)
|
15.5%
|
|
15.6%
|
|
-0.1%
|
Adjusted free cash
flow (ii)
|
$
|
49.3
|
million
|
$
|
43.6
|
million
|
13.1%
|
Adjusted free cash
flow per common share of Cineplex ("Share") (ii)
|
$
|
0.778
|
|
$
|
0.688
|
|
13.1%
|
Earnings per Share
("EPS") - basic*
|
$
|
0.31
|
|
$
|
0.38
|
|
-18.4%
|
EPS -
diluted*
|
$
|
0.31
|
|
$
|
0.38
|
|
-18.4%
|
*The adoption of IFRS
16 negatively impacted the net income by approximately $3.9 million
in the current period and approximately $6.9 million or $0.11 per
Share as compared to Q2 2018.
|
Year to Date Results
|
|
|
|
|
2019
|
2018
|
Period over
Period
Change (i)
|
Total
revenues
|
$
|
804.2
|
million
|
$
|
799.9
|
million
|
0.5%
|
Theatre
attendance
|
32.0
|
million
|
35.1
|
million
|
-8.8%
|
Net
income*
|
$
|
12.0
|
million
|
$
|
39.6
|
million
|
-69.6%
|
Box office
revenues per patron ("BPP") (ii)
|
$
|
10.81
|
|
$
|
10.51
|
|
2.9%
|
Concession
revenues per patron ("CPP") (ii)
|
$
|
6.72
|
|
$
|
6.34
|
|
6.0%
|
Adjusted EBITDA
(ii)
|
$
|
189.7
|
million
|
$
|
121.4
|
million
|
56.3%
|
Adjusted EBITDAaL
(ii) (iii)
|
$
|
102.4
|
million
|
$
|
113.2
|
million
|
-9.5%
|
Adjusted EBITDAaL
margin (ii) (iii)
|
12.7%
|
|
14.2%
|
|
-1.5%
|
Adjusted free cash
flow (ii)
|
$
|
78.4
|
million
|
$
|
82.2
|
million
|
-4.6%
|
Adjusted free cash
flow per common share of Cineplex ("Share") (ii)
|
$
|
1.238
|
|
$
|
1.298
|
|
-4.6%
|
Earnings per Share
("EPS") - basic*
|
$
|
0.19
|
|
$
|
0.63
|
|
-69.8%
|
EPS -
diluted*
|
$
|
0.19
|
|
$
|
0.63
|
|
-69.8%
|
*The adoption of IFRS
16 negatively impacted the net income by approximately $7.2 million
in the year to date and approximately $13.3 million or $0.21 per
Share as compared to 2018.
|
i.
|
Period over period
change calculated based on thousands of dollars except percentage
and per share values. Changes in percentage amounts are
calculated as 2019 value less 2018 value.
|
ii.
|
Adjusted EBITDA,
adjusted EBITDAaL, adjusted EBITDAaL margin, adjusted free cash
flow per common share of Cineplex, BPP and CPP are measures that do
not have a standardized meaning under generally accepted accounting
principles ("GAAP"). These measures as well as other Non-GAAP
financial measures reported by Cineplex are defined in the
'Non-GAAP Financial Measures' section at the end of this news
release.
|
iii.
|
Prior period figures
have been revised to conform to current period
presentation.
|
"As a result of the successful ongoing execution of our
diversification strategy, Cineplex reported a record second
quarter with increases across all revenue sources, resulting in an
all-time quarterly total revenue record of $439.2 million, up 7.4%, compared to the prior
year." said Ellis Jacob, President
and CEO, Cineplex.
"Reporting our second highest ever Q2 box office revenue, we
also achieved second quarter records in all other revenue lines.
Key accomplishments during the quarter included a 21.5% increase in
media revenue, primarily the result of robust showtime and pre-show
advertising sales and higher digital place-based media project
installations. Although the NBA finals contributed to a marginal
theatre attendance decrease, we were able to leverage excitement
around the Toronto Raptors brand-wise by hosting popular viewing
parties at 46 theatres coast-to-coast, in addition to driving
business at our seven locations of The Rec Room. We were pleased to
open Cineplex Cinemas Park Royal and VIP in Vancouver, BC, and our seventh location of The
Rec Room at Avalon Mall in St.
John's, NFLD. We also increased our monthly dividend by 3.4%
to $0.15 per share or $1.80 on an annualized basis."
"In addition to the record results, Cineplex also reported
record second quarter adjusted EBITDAaL of $68.1 million, up 6.9% compared to the prior
year."
"The third quarter is off to a strong start with the Canadian
box office up 10%. Looking ahead, the remainder of the year
has a variety of powerful titles from sequels to first time stories
and I am encouraged by the positive results from our diversified
businesses, as we continue to build scale and achieve more
meaningful growth in the future."
KEY DEVELOPMENTS IN THE SECOND QUARTER OF 2019
The following describes certain key business initiatives
undertaken and results achieved during the second quarter of 2019
in each of Cineplex's core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
- Reported second quarter box office revenues of $189.4 million, an increase of $2.1 million (1.1%) from the $187.2 million reported in the prior year period.
The impact of the growth in the BPP was partially offset by the
decrease in the theatre attendance of $0.3
million (1.7%) over the prior year period.
- BPP was $11.13, an all-time
quarterly record for Cineplex, $0.31
(2.9%) higher than $10.82 reported
during the prior year period.
- Opened Cineplex Cinemas Park Royal and VIP in
Vancouver, British Columbia, an
eleven screen theatre featuring all recliner seating as well as an
UltraAVX screen, D-BOX Motion Seats and four VIP auditoriums.
- Announced plans for a new all-in-one entertainment complex at
Kildonan Place in Winnipeg,
Manitoba which is scheduled to open in 2021. The
entertainment complex will include a six screen theatre featuring
all recliner seating including an UltraAVX screen, a large
amusement game and attractions area featuring virtual reality
("VR") and a range of dining experiences.
Theatre Food Service
- Reported an all-time quarterly record for theatre food service
revenues of $119.7 million in the
second quarter, an increase of $5.8
million (5.1%) from the prior year period as a result of the
growth in CPP more than offsetting the decline in theatre
attendance.
- CPP was $7.04, an all-time
quarterly record for Cineplex, $0.45
(6.8%) higher than $6.59 reported
during the prior year period.
- Expanded alcohol beverage service to an additional 12 theatres,
now totalling 66 (excluding VIP).
- Added nine additional locations to the Uber Eats delivery
platform, which now provides home delivery from 101 theatres.
Alternative Programming
- Alternative Programming (Cineplex Events) featured two live
performances from The Metropolitan Opera and WWE's WrestleMania 35
as well as the live broadcast of All About Eve from National
Theatre Live and Noah from Sight and Sound Theatres.
- Cineplex international film program featured several strong
performing international films, including Punjabi and Hindi in
select markets across the country.
- In partnership with Maple Leaf Sports & Entertainment
("MLSE") Cineplex hosted Toronto Raptors viewing parties during the
NBA Finals at 46 theatres coast-to-coast.
Digital Commerce
- Online and mobile ticketing represented 40% of total theatre
admissions during the second quarter, up from 32% in the prior year
period.
- Total registered users for Cineplex Store increased by 42% in
the second quarter of 2019 as compared to the prior year
period.
- Cineplex Store registered a 179% increase in device activations
over the prior year period.
- Active users of the Cineplex Store increased by 86% as compared
to the prior year period.
MEDIA
- Reported a record second quarter for total media revenues of
$49.6 million, an increase of
$8.8 million (21.5%) compared to the
prior year period.
Cinema Media
- Reported record second quarter revenues of $30.0 million, compared to $26.9 million in the prior year period, an
increase of 11.4%, primarily due to increases in show-time and
pre-show advertising.
Digital Place-Based Media
- Reported an all-time quarterly record for digital place-based
media revenues of $19.6 million, an
increase of $5.7 million (41.3%)
compared to the prior year period due to higher project
installation revenues and other digital services revenues.
- Announced a new partnership with Mountain Equipment Co-op
("MEC") to deliver a unique digital signage solution that will
optimize the retail experience for customers at MEC stores across
Canada.
AMUSEMENT AND LEISURE
Amusement Solutions
- Reported record second quarter revenues of $48.4 million, an increase of $7.0 million (16.8%) over the prior year period
as a result of increased route operations revenue and distribution
sales.
Location-based Entertainment
- The Rec Room reported second quarter revenue of
$20.9 million, an increase of
$5.2 million (33.4%) over the prior
year period due to two additional locations open in the current
period as compared to last year.
- Opened The Rec Room at Avalon Mall in
St. John's, Newfoundland, on
April 30, 2019, the seventh location
of The Rec Room.
- Announced plans for a new The Rec Room at Granville
Entertainment District in Vancouver,
British Columbia, expected to open in 2021.
Esports
- WGN hosted its fourth annual Call of Duty esports
tournament. The tournament finals took place on April 6 and 7, 2019 at the Scotiabank Theatre
Toronto for a grand prize of $25,000.
- Collegiate Starleague ("CSL") held the 2019 Grand Finals in
Atlantic City on April 26 to 28, 2019 where esports teams competed
for over $100,000 in
scholarships.
LOYALTY
Membership in the SCENE loyalty program increased by 0.2 million
members in the period, reaching 9.9 million at June 30, 2019.
CORPORATE
- During the second quarter of 2019, the Board of Directors of
Cineplex (the "Board") announced a monthly dividend increase of
3.4% to $0.150 per share
($1.80 on an annual basis) up from
$0.145 per share ($1.74 on an annual basis) effective with the
May 2019 dividend paid in
June 2019.
OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2019
Total revenues
Total revenues for the three months ended June 30, 2019 increased $30.2 million (7.4%) to $439.2 million as compared to the prior year
period. Total revenues for the six months ended June 30, 2019 increased $4.3 million (0.5%) to $804.2 million as compared to the prior year
period. A discussion of the factors affecting the changes in box
office, food service, media, amusement and other revenues for the
period is provided below.
Non-GAAP measures discussed throughout this news release,
including adjusted EBITDA, adjusted EBITDAaL, adjusted free cash
flow, theatre attendance, BPP, premium priced product, same theatre
metrics, CPP, film cost percentage, food service cost percentage
and concession margin per patron are defined and discussed in the
Non-GAAP measures section of this news release.
Box office revenues
The following table highlights the movement in box office
revenues, theatre attendance and BPP for the quarter and the year
to date (in thousands of dollars, except theatre attendance
reported in thousands of patrons and per patron amounts, unless
otherwise noted):
|
|
|
Box office
revenues
|
Second
Quarter
|
Year to
Date
|
|
2019
|
|
2018
|
Change
|
|
2019
|
|
2018
|
Change
|
|
|
|
|
|
Box office
revenues
|
$
|
189,371
|
$
|
187,234
|
1.1%
|
$
|
345,867
|
$
|
368,614
|
-6.2%
|
Theatre attendance
(i)
|
17,011
|
17,307
|
-1.7%
|
31,999
|
35,072
|
-8.8%
|
Box office revenue
per patron (i)
|
$
|
11.13
|
$
|
10.82
|
2.9%
|
$
|
10.81
|
$
|
10.51
|
2.9%
|
BPP excluding premium
priced product (i)
|
$
|
9.30
|
$
|
9.06
|
2.6%
|
$
|
9.18
|
$
|
8.92
|
2.9%
|
Canadian industry
revenues (ii)
|
|
2.5%
|
|
|
-4.4%
|
Same theatre box
office revenues (i)
|
$
|
183,061
|
$
|
185,231
|
-1.2%
|
$
|
335,680
|
$
|
365,078
|
-8.1%
|
Same theatre
attendance (i)
|
16,543
|
17,105
|
-3.3%
|
31,209
|
34,697
|
-10.1%
|
% Total box from
premium priced product (i)
|
50.9%
|
49.0%
|
1.9%
|
46.3%
|
45.1%
|
1.2%
|
(i) See Non-GAAP
measures section of this news release.
|
(ii) Source: Gross
box office receipts (inclusive of all taxes) from The Movie Theatre
Association of Canada industry data adjusted for calendar quarter
dates.
|
|
|
|
Box office
continuity
|
Second
Quarter
|
Year to
Date
|
|
Box
Office
|
Theatre
Attendance
|
Box
Office
|
Theatre
Attendance
|
2018 as
reported
|
$
|
187,234
|
17,307
|
$
|
368,614
|
35,072
|
Same theatre
attendance change
|
(6,081)
|
(562)
|
(36,708)
|
(3,488)
|
Impact of same
theatre BPP change
|
3,911
|
—
|
7,310
|
—
|
New and acquired
theatres (i)
|
5,653
|
414
|
9,191
|
702
|
Disposed and closed
theatres (i)
|
(1,346)
|
(148)
|
(2,540)
|
(287)
|
2019 as
reported
|
$
|
189,371
|
17,011
|
$
|
345,867
|
31,999
|
(i) See Non-GAAP
measures section of this news release. Represents theatres
opened, acquired, disposed or closed subsequent to the start of the
prior year comparative period.
|
Second Quarter
|
|
|
|
|
|
|
Second Quarter
2019 Top Cineplex Films
|
3D
|
%
Box
|
Second Quarter
2018 Top Cineplex Films
|
3D
|
%
Box
|
1
|
Avengers:
Endgame
|
√
|
31.6%
|
1
|
Avengers: Infinity
War
|
√
|
24.0%
|
2
|
Aladdin
|
√
|
9.0%
|
2
|
Deadpool 2
|
|
11.3%
|
3
|
Pokémon Detective
Pikachu
|
√
|
5.1%
|
3
|
Incredibles
2
|
√
|
9.6%
|
4
|
John Wick: Chapter 3
- Parabellum
|
|
5.1%
|
4
|
Jurassic World:
Fallen Kingdom
|
√
|
6.8%
|
5
|
Shazam!
|
√
|
4.6%
|
5
|
Solo: A Star Wars
Story
|
√
|
6.0%
|
Box office revenues increased $2.1
million, or 1.1%, to $189.4
million during the period, compared to $187.2 million reported in the second quarter in
2018. The increase was due to a second quarter BPP of
$11.13, a $0.31 increase (2.9%) from the prior year period,
setting an all-time quarterly record for Cineplex. This
increase was due to a higher percentage of box office revenue from
premium price offerings as a result of the success of Avengers:
Endgame which became the highest grossing film worldwide and
the second highest in North
America, in addition to price increases in selective
markets. Premium priced offerings accounted for 50.9% of
Cineplex's box office revenues in current year period as compared
to 49.0% in the prior year period. The increase in BPP was
partially offset by a 1.7% decrease to 17.0 million guests in
theatre attendance, as compared to the prior year period. The
theatre attendance decrease was due to the wider appeal of the film
slate in the second quarter of 2018 as compared the second quarter
of 2019 as well as also being negatively impacted by the Toronto
Raptors' championship run. Although Cineplex hosted viewing
parties for the finals series at 46 theatres coast to coast, the
impact of home viewing of playoff games more than offset the impact
of the in-theatre events.
Year to Date
|
|
|
|
|
|
Year to Date 2019
Top Cineplex Films
|
3D
|
%
Box
|
Year to Date 2018
Top Cineplex Films
|
3D
|
%
Box
|
1
|
Avengers:
Endgame
|
√
|
17.4%
|
1
|
Avengers: Infinity
War
|
√
|
12.1%
|
2
|
Captain
Marvel
|
√
|
8.9%
|
2
|
Black
Panther
|
√
|
11.9%
|
3
|
Aladdin
|
√
|
5.0%
|
3
|
Deadpool 2
|
|
5.7%
|
4
|
How To Train Your
Dragon: The Hidden World
|
√
|
3.4%
|
4
|
Jumanji: Welcome to
The Jungle
|
√
|
5.0%
|
5
|
Aquaman
|
√
|
3.1%
|
5
|
Incredibles
2
|
√
|
4.8%
|
Box office revenues for the six months ended June 30, 2019 were $345.9
million, a decrease of $22.7
million or 6.2% as compared to the prior year due to the
8.8% decrease in theatre attendance more than offsetting the higher
BPP in the current year period compared to the 2018 period.
Cineplex's BPP for the period increased $0.30, or 2.9%, from $10.51 in the prior year period to $10.81 in the current period. This increase
was due to a higher percentage of box office revenue from premium
priced offerings, which accounted for 46.3% of Cineplex's box
office revenues in the six months ended June
30, 2019, as compared to 45.1% in the prior year period, as
well as price increases in selective markets as compared to the
prior year period.
Food service revenues
The following table highlights the movement in food service
revenues, theatre attendance and CPP for the quarter and the year
to date (in thousands of dollars, except theatre attendance and
same theatre attendance reported in thousands of patrons and per
patron amounts):
|
|
|
|
|
Food service
revenues
|
Second
Quarter
|
|
|
Year to
Date
|
|
2019
|
|
2018
|
|
Change
|
2019
|
|
2018
|
|
Change
|
|
|
|
|
|
|
|
Food service -
theatres
|
$
|
119,741
|
|
$
|
113,969
|
|
5.1
|
%
|
$
|
214,913
|
|
$
|
222,199
|
|
-3.3%
|
Food service - The
Rec Room
|
9,822
|
|
8,301
|
|
18.3
|
%
|
17,708
|
|
17,019
|
|
4.0%
|
Total food service
revenues
|
$
|
129,563
|
|
$
|
122,270
|
|
6.0
|
%
|
$
|
232,621
|
|
$
|
239,218
|
|
-2.8%
|
|
|
|
|
|
|
|
Theatre attendance
(i)
|
17,011
|
|
17,307
|
|
-1.7
|
%
|
31,999
|
|
35,072
|
|
-8.8%
|
CPP (i)
(ii)
|
$
|
7.04
|
|
$
|
6.59
|
|
6.8
|
%
|
$
|
6.72
|
|
$
|
6.34
|
|
6.0%
|
Same theatre food
service revenues (i)
|
$
|
114,868
|
|
$
|
112,699
|
|
1.9
|
%
|
$
|
206,998
|
|
$
|
220,035
|
|
-5.9%
|
Same theatre
attendance (i)
|
16,543
|
|
17,105
|
|
-3.3
|
%
|
31,209
|
|
34,697
|
|
-10.1%
|
(i) See Non-GAAP
measures section of this news release.
|
(ii) Food service
revenue from The Rec Room is not included in the CPP
calculation.
|
|
|
|
Theatre food
service revenue continuity
|
Second
Quarter
|
Year to
Date
|
|
Theatre Food
Service
|
|
Theatre
Attendance
|
|
Theatre Food
Service
|
|
Attendance
|
2018 as
reported
|
$
|
113,969
|
|
17,307
|
|
$
|
222,199
|
|
35,072
|
Same theatre
attendance change
|
(3,700)
|
|
(562)
|
|
(22,124)
|
|
(3,488)
|
Impact of same
theatre CPP change
|
5,869
|
|
—
|
|
9,087
|
|
—
|
New and acquired
theatres (i)
|
4,420
|
|
414
|
|
7,283
|
|
702
|
Disposed and closed
theatres (i)
|
(817)
|
|
(148)
|
|
(1,532)
|
|
(287)
|
2019 as
reported
|
$
|
119,741
|
|
17,011
|
|
$
|
214,913
|
|
31,999
|
(i) See Non-GAAP
measures section of this news release. Represents theatres
opened, acquired, disposed or closed subsequent to the start of the
prior year comparative period.
|
Second Quarter
Food service revenues are comprised primarily of concession
revenues, which includes food service sales at theatre locations.
Food service revenues also include food and beverage sales at
The Rec Room. Food service revenues increased
$7.3 million or 6.0% mainly as a
result of the increase of $5.8
million (5.1%) to $119.7
million in theatre food service revenues, an all-time
quarterly record. The increase in theatre food service
revenues was due to the higher CPP. CPP increased 6.8% to
$7.04, an all-time quarterly record
for Cineplex. Expanded offerings outside of core food service
products, including offerings at Cineplex's VIP Cinemas and
Outtakes locations and expanded beverage services have contributed
to increased visitation and higher average transaction values,
resulting in the record CPP in the period. Food service
revenue from The Rec Room is not included in the CPP
calculation.
Food service revenues from The Rec Room increased
$1.5 million (18.3%) compared to the
prior year period primarily due to the increase in locations from
five in 2018 to seven in 2019.
Year to Date
Food service revenues decreased $6.6
million, or 2.8% as compared to the prior year, primarily
due to the impact of an 8.8% decrease in theatre attendance,
partially offset by the 6.3% increase in CPP and the $0.7 million or 4.0% increase in contribution
from The Rec Room. The CPP of $6.72 is the highest Cineplex has reported
through the first six months of any year. Food service
revenues from The Rec Room increased 4.0% to $17.7 million as a result of the increased
locations as compared to the prior year period. Food service
revenue from The Rec Room is not included in the CPP
calculation.
While programs including SCENE offers provided on food service
purchases impact CPP, Cineplex believes that this loyalty program
drives incremental visits and food service purchases, resulting in
higher overall food service revenues.
Media revenues
The following table highlights the movement in media revenues
for the quarter and the year to date (in thousands of dollars):
|
|
|
Media
revenues
|
Second
Quarter
|
Year to
Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
Cinema
media
|
$
|
29,978
|
$
|
26,921
|
11.4%
|
$
|
51,361
|
$
|
48,253
|
6.4%
|
Digital place-based
media
|
19,600
|
13,870
|
41.3%
|
33,230
|
25,051
|
32.6%
|
Total media
revenues
|
$
|
49,578
|
$
|
40,791
|
21.5%
|
$
|
84,591
|
$
|
73,304
|
15.4%
|
Second Quarter
Total media revenues increased $8.8
million (21.5%) to a second quarter record $49.6 million as compared to the prior year
period. The increase was primarily due to a $5.7 million (41.3%) increase in digital
place-based media to an all-time quarterly record of $19.6 million primarily as a result of increased
project installation revenues. Cinema media increased
$3.1 million (11.4%) to a second
quarter record of $30.0 million as a
result of increases in show-time and pre-show advertising.
During the quarter, digital place-based media added 248 new
locations (an increase of 1.8% from March
31, 2019) for a total of 14,095 locations as at June 30, 2019.
Year to Date
Total media revenues increased $11.3
million for the six months ended June
30, 2019 as compared to the prior year period. The
increase resulted from an $8.2
million increase in digital place-based media revenues due
to higher project installation revenue and a $3.1 million increase in Cinema media due to
higher show-time and pre-show theatre advertising.
Year to date, digital place-based media added 593 new locations
(an increase of 4.4% from December 31,
2018).
Amusement Revenues
The following table highlights the movement in amusement
revenues for the quarter and the year to date (in thousands of
dollars):
|
|
|
Amusement
revenues
|
Second
Quarter
|
Year to
Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
Amusement - P1AG
excluding Cineplex exhibition and The Rec Room
(i)
|
$
|
45,817
|
$
|
39,121
|
17.1%
|
$
|
93,490
|
$
|
79,359
|
17.8%
|
Amusement - Cineplex
exhibition (i)
|
2,608
|
2,350
|
11.0%
|
5,392
|
5,087
|
6.0%
|
Amusement - The
Rec Room
|
9,692
|
7,106
|
36.4%
|
17,735
|
14,036
|
26.4%
|
Total amusement
revenues
|
$
|
58,117
|
$
|
48,577
|
19.6%
|
$
|
116,617
|
$
|
98,482
|
18.4%
|
(i) Cineplex receives
a venue revenue share on games revenues earned at in-theatre game
rooms and XSCAPE Entertainment Centres. Amusement - Cineplex
exhibition reports the total of this venue revenue share which is
consistent with the historical presentation of Cineplex's amusement
revenues. Amusement - P1AG excluding Cineplex exhibition and
The Rec Room reflects P1AG's gross amusement revenues, net
of the venue revenue share paid to Cineplex reflected in Amusement
- Cineplex exhibition above.
|
Second Quarter
Amusement revenues increased 19.6%, or $9.5 million, to a second quarter record of
$58.1 million in the second quarter
of 2019 compared to the prior year period. The growth was
primarily due to an increase in route revenues including the impact
of the agreement signed with Cinemark in the second quarter of 2018
and an increase in distribution sales in Canada and the
United States. Amusement revenues from The Rec Room
increased 36.4% or $2.6 million
compared to the prior year period as a result of the additional
locations.
Year to Date
For the year to date period, amusement revenues increased 18.4%
or $18.1 million, to $116.6 million compared to the prior year period
due to the agreement signed with Cinemark resulting in increased
route and distribution revenue and strong growth in revenue from
the additional locations of The Rec Room as compared to the
prior year period.
Other revenues
The following table highlights the other revenues which includes
revenues from the Cineplex Store, promotional activities,
screenings, private parties, corporate events, breakage on gift
card sales and revenues from management fees for the quarter and
the year to date (in thousands of dollars):
|
|
|
Other
revenues
|
Second
Quarter
|
Year to
Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
Other
revenues
|
$
|
12,616
|
$
|
10,181
|
23.9%
|
$
|
24,487
|
$
|
20,307
|
20.6%
|
The quarterly and year to date increase in other revenues are
primarily due to higher volume of digital commerce sales.
Film cost
The following table highlights the movement in film cost and the
film cost percentage for the quarter and the year to date (in
thousands of dollars, except film cost percentage):
|
|
|
Film
cost
|
Second
Quarter
|
Year to
Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
Film cost
|
$
|
103,005
|
$
|
102,346
|
0.6%
|
$
|
181,726
|
$
|
197,550
|
-8.0%
|
Film cost percentage
(i)
|
54.4%
|
54.7%
|
-0.3%
|
52.5%
|
53.6%
|
-1.1%
|
(i) See Non-GAAP
measures section of this news release.
|
Second Quarter
Film cost varies primarily with box office revenues and can vary
from quarter to quarter usually based on the relative strength of
the titles exhibited during the period. This is due to film
cost terms varying by title and distributor. Film cost
percentage during the second quarter of 2019 was 54.4%, a 0.3%
decrease from the prior year.
Year to Date
The year to date decrease in film cost expense was due to a
combination of the 1.1% decrease in the film cost percentage and
the lower box office revenues in the current period compared to the
prior year period. The decrease in film cost percentage is
attributable to the top films in the current period having lower
settlement rates compared to the prior year period.
Cost of food service
The following table highlights the movement in cost of food
service and food service cost as a percentage of food service
revenues ("concession cost percentage") for both theatres and
The Rec Room for the quarter and the year to date (in
thousands of dollars, except percentages and margins per
patron):
|
|
|
Cost of food
service
|
Second
Quarter
|
Year to
date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
Cost of food service
- theatre
|
$
|
25,590
|
$
|
22,767
|
12.4%
|
$
|
46,861
|
$
|
45,203
|
3.7%
|
Cost of food service
- The Rec Room
|
2,657
|
2,253
|
17.9%
|
4,822
|
4,593
|
5.0%
|
Total cost of food
service
|
$
|
28,247
|
$
|
25,020
|
12.9%
|
$
|
51,683
|
$
|
49,796
|
3.8%
|
|
|
|
|
|
|
|
Theatre concession
cost percentage (i)
|
21.4%
|
20.0%
|
1.4%
|
21.8%
|
20.3%
|
1.5%
|
The Rec Room
food cost percentage (i)
|
27.1%
|
27.1%
|
—%
|
27.2%
|
27.0%
|
0.2%
|
Theatre concession
margin per patron (i)
|
$
|
5.53
|
$
|
5.27
|
4.9%
|
$
|
5.25
|
$
|
5.05
|
4.0%
|
(i) See Non-GAAP
measures section of this news release.
|
Second Quarter
Cost of food service at the theatres varies primarily with
theatre attendance as well as the quantity and mix of offerings
sold. Cost of food service at The Rec Room varies
primarily with the volume of guests who visit the location as well
as the quantity and mix between food and beverage items sold.
The increase in the theatre cost of food service as compared to
the prior year period was primarily due to the higher food service
revenues in the second quarter of 2019 and the increase in the
theatre concession cost percentage from 20.0% in the prior year
period to 21.4% in 2019.
The theatre concession margin per patron increased 4.9% from
$5.27 in the second quarter of 2018
to $5.53 in the same period in 2019,
reflecting the impact of the higher CPP during the period.
The increase in The Rec Room cost of food service as
compared to the prior year period was due to the higher food
service revenues as a result of the increase in operating
locations. The Rec Room food cost percentage during
the quarter was flat as compared to the prior period.
Year to Date
The increase in the theatre cost of food service as compared to
the prior year period was due to the increase in the concession
cost percentage. The theatre concession margin per patron
increased from $5.05 in the prior
year period to $5.25 in the current
period, reflecting the impact of the higher CPP in the current
period.
The increase in The Rec Room cost of food service as
compared to the prior year period was due to the higher food
service revenues resulting from the increased number of
locations.
Depreciation and amortization
The following table highlights the movement in depreciation and
amortization expenses during the quarter and the year to date (in
thousands of dollars):
|
|
|
Depreciation and
amortization expenses
|
Second
Quarter
|
Year to
Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
Depreciation of
property, equipment and leaseholds
|
$
|
29,554
|
$
|
28,231
|
4.7%
|
$
|
58,411
|
$
|
55,490
|
5.3%
|
Amortization of
intangible assets and other
|
4,035
|
4,029
|
0.1%
|
8,033
|
7,964
|
0.9%
|
Sub-total -
depreciation and amortization - other assets
|
$
|
33,589
|
$
|
32,260
|
4.1%
|
$
|
66,444
|
$
|
63,454
|
4.7%
|
Depreciation -
right-of-use assets
|
36,557
|
—
|
NM
|
73,019
|
—
|
NM
|
Total depreciation
and amortization
|
$
|
70,146
|
$
|
32,260
|
117.4%
|
$
|
139,463
|
$
|
63,454
|
119.8%
|
The quarterly and year to date increase in depreciation of
property, equipment and leaseholds of $1.3
million and $2.9 million
respectively was primarily due to the investments in amusement and
leisure businesses.
The quarterly and year to date increase in amortization of
intangible assets and other as compared to the prior year periods
was primarily due to internally developed software for digital
products including the Cineplex mobile app and website
platform.
The quarterly and year to date increase in depreciation of
right-of-use assets was as a result of the adoption of IFRS 16. The
right-of-use assets are depreciated over the lease term. The
current quarter and year to date expense represents the
depreciation charge for the periods.
Loss on disposal of assets
The following table shows the movement in the loss on disposal
of assets during the quarter and the year to date (in thousands of
dollars):
|
|
|
Loss on disposal
of assets
|
Second
Quarter
|
Year to
Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
Loss on disposal of
assets
|
$
|
116
|
$
|
640
|
-81.9%
|
$
|
593
|
$
|
850
|
-30.2%
|
Other costs
Other costs include three main sub-categories of expenses;
theatre occupancy expenses, which capture the rent and associated
occupancy costs for Cineplex's theatre operations; other operating
expenses, which include the costs related to running Cineplex's
film entertainment and content, media, as well as amusement and
leisure; and general and administrative expenses, which includes
costs related to managing Cineplex's operations, including head
office expenses. Please see the discussions below for more details
on these categories.
The following table highlights the movement in other costs for
the quarter and the year to date (in thousands of dollars):
|
|
|
Other
costs
|
Second
Quarter
|
Year to
Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
Theatre occupancy
expenses
|
$
|
16,748
|
$
|
52,788
|
-68.3%
|
$
|
35,155
|
$
|
104,686
|
-66.4%
|
Other operating
expenses
|
161,658
|
143,162
|
12.9%
|
309,841
|
290,569
|
6.6%
|
General and
administrative expenses
|
17,107
|
17,822
|
-4.0%
|
35,959
|
35,971
|
—%
|
Total other
costs
|
$
|
195,513
|
$
|
213,772
|
-8.5%
|
$
|
380,955
|
$
|
431,226
|
-11.7%
|
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy
expenses for the quarter and the year to date (in thousands of
dollars) with the prior period presentation revised to provide
comparability to the impact of the transition to IFRS 16:
|
|
|
Theatre occupancy
expenses
|
Second
Quarter
|
Year to
Date
|
|
2019
|
Revised
2018
|
Change
|
2019
|
Revised
2018
|
Change
|
|
|
|
|
|
|
|
Cash rent - theatre
(i) (vii)
|
$
|
38,889
|
$
|
38,747
|
0.4%
|
$
|
78,768
|
$
|
77,217
|
2.0%
|
Other
occupancy
|
18,543
|
18,706
|
-0.9%
|
36,961
|
37,373
|
-1.1%
|
One-time items
(ii)
|
(1,711)
|
(608)
|
181.4%
|
(1,890)
|
(1,880)
|
0.5%
|
Total theatre
occupancy including cash lease payments
|
$
|
55,721
|
$
|
56,845
|
-2.0%
|
$
|
113,839
|
$
|
112,710
|
1.0%
|
|
|
|
|
|
|
|
Non-cash rent (iii)
(vi)
|
—
|
(3,068)
|
NM
|
—
|
(6,046)
|
NM
|
Rent previously
recognized as a finance lease (iv)
|
—
|
(989)
|
NM
|
—
|
(1,978)
|
NM
|
Cash rent related to
lease obligations (v)
|
(38,973)
|
—
|
NM
|
(78,684)
|
—
|
NM
|
Theatre occupancy as
reported
|
$
|
16,748
|
$
|
52,788
|
-68.3%
|
$
|
35,155
|
$
|
104,686
|
-66.4%
|
(i) Represents the
cash payments for theatre rent during the quarter. See IFRS 16
reconciliation section of the MD&A for further
details.
|
(ii) One-time items
include amounts related to both theatre rent and other theatre
occupancy costs. They are isolated here to illustrate
Cineplex's theatre rent and other theatre occupancy costs excluding
these one-time, non-recurring items.
|
(iii) Non-cash rent
included in the 2018 balances in the previous reporting period. See
IFRS 16 reconciliation section of the MD&A for further
details.
|
(iv) Rent payments
that were charged to the finance lease obligations in the previous
reporting period. See IFRS 16 reconciliation section of the
MD&A for further details.
|
(v) Cash rent that
has been reallocated to offset the lease obligations.
|
(vi) See Non-GAAP
measures section of this news release.
|
(vii) The 2019
year-to-date balance includes $0.7 million of cash rent paid not
pertaining to the current period. See Non-GAAP measures section of
this news release.
|
|
|
|
Theatre occupancy
continuity
|
Second
Quarter
|
Year to
Date
|
|
Occupancy
|
Occupancy
|
2018 as
reported
|
$
|
52,788
|
$
|
104,686
|
Impact of new and
acquired theatres
|
1,736
|
2,486
|
Impact of disposed
theatres
|
(697)
|
(1,233)
|
Same theatre rent
change (i)
|
(582)
|
596
|
One-time
items
|
(1,103)
|
(10)
|
Other
|
(478)
|
(709)
|
|
|
|
Impact of IFRS 16
adoption:
|
|
|
|
|
|
Impact of non-cash
rent in prior period
|
3,068
|
6,046
|
Cash rent previously
recognized as a finance lease
|
989
|
1,977
|
Cash rent related to
lease obligations
|
(38,973)
|
(78,684)
|
2019 as
reported
|
$
|
16,748
|
$
|
35,155
|
(i) See Non-GAAP
measures section of this news release.
|
Second Quarter
Theatre occupancy expenses decreased $36.0 million (68.3%) during the second quarter
of 2019 compared to the prior year period. This decrease was
primarily due to the impact of the adoption of IFRS 16 partially
offset by the impact of non-cash rent in the prior period.
Total theatre occupancy including cash lease payments decreased
$1.1 million (2.0%) during the second
quarter of 2018 compared to the prior year period. This
decrease was due to a $1.1 million
decrease in one-time credits.
Year to Date
For the year to date period, theatre occupancy expenses
decreased $69.5 million (66.4%)
compared to the prior year due to the impact of the adoption of
IFRS partially offset by the impact of non-cash rent in the prior
year period.
For the year to date period, theatre occupancy including cash
payments increased $1.1 million
(1.0%) as compared to the prior year period. The
increase was primarily due to the impact of new theatres net of
disposed theatres.
Other operating expenses
The following table highlights the movement in other operating
expenses during the quarter and the year to date (in thousands of
dollars) with the prior period presentation revised to provide
comparability to the impact of the transition to IFRS 16:
|
|
|
Other operating
expenses
|
Second
Quarter
|
Year to
Date
|
|
2019
|
Revised
2018
|
Change
|
2019
|
Revised
2018
|
Change
|
|
|
|
|
|
|
|
Theatre
payroll
|
$
|
41,072
|
$
|
37,506
|
9.5%
|
$
|
77,782
|
$
|
75,800
|
2.6%
|
Theatre operating
expenses
|
30,225
|
28,913
|
4.5%
|
58,787
|
58,332
|
0.8%
|
Media (i)
|
21,185
|
17,288
|
22.5%
|
37,927
|
33,709
|
12.5%
|
P1AG (i)
|
40,529
|
36,140
|
12.1%
|
81,494
|
71,859
|
13.4%
|
The Rec Room
(i) (ii)
|
13,957
|
11,461
|
21.8%
|
25,105
|
22,001
|
14.1%
|
Location-based
entertainment pre-opening (i) (iii)
|
673
|
848
|
-20.6%
|
1,364
|
1,138
|
19.9%
|
SCENE
|
4,060
|
3,173
|
28.0%
|
9,098
|
7,288
|
24.8%
|
Marketing
|
4,192
|
3,495
|
19.9%
|
7,043
|
7,903
|
-10.9%
|
Business interruption
insurance proceeds
|
—
|
(3,700)
|
NM
|
—
|
(3,700)
|
NM
|
Other (iv)
|
10,427
|
8,086
|
29.0%
|
20,236
|
16,392
|
23.5%
|
Other operating
expenses including cash lease payments
|
$
|
166,320
|
$
|
143,210
|
16.1%
|
$
|
318,836
|
$
|
290,722
|
9.7%
|
Non-cash rent (v)
(vi)
|
—
|
(48)
|
NM
|
—
|
(153)
|
NM
|
Cash rent related to
lease obligations (vii)
|
(4,662)
|
—
|
NM
|
(8,995)
|
—
|
NM
|
Other operating
expenses as reported
|
$
|
161,658
|
$
|
143,162
|
12.9%
|
$
|
309,841
|
$
|
290,569
|
6.6%
|
(i) Prior period
balances were revised to exclude non-cash rent. See IFRS 16
reconciliation section of the MD&A for further
details.
|
(ii) Includes
operating costs of The Rec Room locations. Overhead
relating to management of The Rec Room portfolio are
included in the 'Other' line.
|
(iii) Includes
pre-opening costs of The Rec Room and Playdium
locations.
|
(iv) Other category
includes overhead costs related to The Rec Room, operating
costs of WGN and other Cineplex internal departments.
|
(v) Non-cash rent
included in the 2018 balances in the previous reporting period. See
IFRS 16 reconciliation section of the MD&A for further
details.
|
(vi) See Non-GAAP
measures section of this news release.
|
(vii) Cash rent that
has been reallocated to offset the lease obligations.
|
|
|
|
Other operating
continuity
|
Second
Quarter
|
Year to
Date
|
|
Other
Operating
|
Other
Operating
|
2018 as
reported
|
$
|
143,162
|
|
$
|
290,569
|
Impact of new and
acquired theatres
|
2,722
|
|
4,823
|
Impact of disposed
theatres
|
(539)
|
|
(1,004)
|
Same theatre payroll
change (i)
|
1,911
|
|
(779)
|
Same theatre
operating expenses change (i)
|
810
|
|
(544)
|
Media operating
expenses change
|
3,897
|
|
4,218
|
P1AG operating
expenses change
|
4,389
|
|
9,635
|
The Rec Room
operating expenses change
|
2,496
|
|
3,104
|
Location-based
entertainment pre-opening change
|
(175)
|
|
226
|
SCENE
change
|
887
|
|
1,810
|
Marketing
change
|
697
|
|
(860)
|
Business interruption
insurance proceeds change
|
3,700
|
|
3,700
|
Other
|
2,315
|
|
3,785
|
Impact of IFRS 16
adoption:
|
|
|
|
|
|
Non-cash rent in
prior period
|
48
|
|
153
|
Cash rent related to
lease obligations
|
(4,662)
|
|
(8,995)
|
2019 as
reported
|
$
|
161,658
|
|
$
|
309,841
|
(i) See Non-GAAP
measures section of this news release.
|
Second Quarter
Other operating expenses during the second quarter of 2019
increased $18.5 million or 12.9%
compared to the prior year period. Cineplex incurred higher
amusement and leisure costs due to an increase in the route
business from P1AG and from an increase in the number of locations
of The Rec Room. Media operating expenses increased due to
higher CDM project installation revenue as compared to the prior
year period. Same theatre payroll expenses increased due to higher
minimum wages in Alberta and
British Columbia. During the
second quarter of 2018, Cineplex recognized business interruption
insurance proceeds of $3.7 million,
as a result of the fire at Cineplex Seton and VIP in late
2017.
These increases were partially offset by the cash rent allocated
to lease obligations arising upon the adoption of IFRS 16.
Year to Date
For the six months ended June 30,
2019, other operating expenses increased $19.3 million or 6.6% compared to the prior year
period. Cineplex incurred higher amusement and leisure costs due to
an increase in distribution sales and route revenue from P1AG and
from an increase in the number of locations of The Rec Room.
Media operating expenses increased due to higher CDM project
installation revenue as compared to the prior year period. SCENE
expenses increased $1.8 million due
to the timing of expenses. Other expenses increased due to
higher digital commerce business volumes as compared to the prior
year period.
These increases were partially offset by a decrease in same
theatre payroll and operating expenses due to a decrease in
business volumes for theatre exhibition business and cash rent
allocated to lease obligations arising upon the adoption of IFRS
16.
General and administrative expenses
The following table highlights the movement in general and
administrative ("G&A") expenses during the quarter and the year
to date, including Share-based compensation costs, and G&A
expenses net of these costs (in thousands of dollars) with the
prior period presentation revised to provide comparability to the
impact of the transition to IFRS 16:
|
|
|
G&A
expenses
|
Second
Quarter
|
Year to
Date
|
|
2019
|
Revised
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
G&A excluding
LTIP and option plan expense (i)
|
$
|
15,892
|
$
|
14,772
|
7.6%
|
$
|
33,720
|
$
|
32,545
|
3.6%
|
Restructuring
|
713
|
2,803
|
-74.6%
|
713
|
3,799
|
-81.2%
|
LTIP (ii)
|
247
|
(242)
|
NM
|
1,009
|
(1,291)
|
NM
|
Option
plan
|
404
|
487
|
-17.0%
|
793
|
918
|
-13.6%
|
G&A expenses
including cash lease payments
|
$
|
17,256
|
$
|
17,820
|
-3.2%
|
$
|
36,235
|
$
|
35,971
|
0.7%
|
Non-cash rent (iii)
(iv)
|
—
|
2
|
NM
|
—
|
—
|
NM
|
Cash rent included as
part of lease obligations (v)
|
(149)
|
—
|
NM
|
(276)
|
—
|
NM
|
G&A expenses as
reported
|
$
|
17,107
|
$
|
17,822
|
-4.0%
|
$
|
35,959
|
$
|
35,971
|
—%
|
(i) Prior period
balance was revised to exclude non-cash rent. See IFRS 16
reconciliation section of the MD&A for further
details.
|
(ii) LTIP includes
the expense for the LTIP program as well as the expense for the
executive and Board deferred share unit plans.
|
(iii) Non-cash rent
included in the 2018 balances in the previous reporting
period. See IFRS 16 reconciliation section of the MD&A
for further details.
|
(iv) See Non-GAAP
measures section of this news release.
|
(v) Cash rent that
has been reallocated to offset the lease obligations.
|
Second Quarter
G&A expenses decreased $0.7
million during the second quarter of 2019 compared to the
prior year period. In the second quarter of 2018 Cineplex
implemented a cost reduction initiative. Costs associated with this
initiative decreased by $2.1 million
as compared to the prior year. This was partially offset by a
$1.1 million increase to G&A due
to higher payroll costs and a $0.5
million increase in LTIP expense due to ongoing regular
vesting and a nominal change in the share price.
Year to Date
G&A expenses for the year to date period were flat compared
to the prior year period. Increases in G&A were primarily
due to a $2.3 million increase in
LTIP and a $1.2 million increase in
G&A excluding LTIP and option plan expense. LTIP for the
year to date reflected ongoing regular vesting and a relatively
flat share price during the period, compared to a significant price
decrease in the prior year period resulting in an expense recovery.
G&A excluding LTIP and option plan expense increased due in
part to an increase in consulting work including the software
upgrade undertaken for IFRS 16. These increases were partially
offset by $3.1 million reduction in
the restructuring costs.
EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA") (see Non-GAAP measures section of this news
release)
The following table presents EBITDA, adjusted EBITDA and
adjusted EBITDAaL for the three and six months ended June 30, 2019 as compared to the prior year
periods (expressed in thousands of dollars, except adjusted
EBITDAaL margin):
|
|
|
EBITDA
|
Second
Quarter
|
Year to
Date
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
EBITDA
|
$
|
113,332
|
$
|
68,177
|
66.2%
|
$
|
190,022
|
$
|
123,067
|
54.4%
|
Adjusted
EBITDA
|
$
|
112,249
|
$
|
67,840
|
65.5%
|
$
|
189,691
|
$
|
121,372
|
56.3%
|
Adjusted EBITDAaL
(i)
|
$
|
68,112
|
$
|
63,737
|
6.9%
|
$
|
102,443
|
$
|
113,195
|
-9.5%
|
Adjusted EBITDAaL
margin (i)
|
15.5%
|
15.6%
|
-0.1%
|
12.7%
|
14.2%
|
-1.5%
|
(i) Prior period
figures have been revised to conform to current period
presentation. See IFRS 16 reconciliation section of the
MD&A.
|
Adjusted EBITDAaL for the second quarter of 2019 increased
$4.4 million (6.9%) to a second
quarter record of $68.1 million as
compared to the prior year period. The increase was due to higher
revenues across all businesses. The record BPP and CPP amounts
resulted in higher box office and theatre food service
revenues. Amusement revenues increased due to higher
distribution and route revenues. Higher revenues from The
Rec Room, Cineplex Media and Cineplex Digital Media also
contributed to the increase for adjusted EBITDAaL. Adjusted
EBITDAaL margin, calculated as adjusted EBITDAaL divided by total
revenues, was 15.5%, relatively flat compared to the prior year
period.
Adjusted EBITDAaL for the six months ended June 30, 2019 decreased $10.8 million, or 9.5%, as compared to the prior
year period. The decrease was due to a decline in box office
and theatre food service revenues as a result of reduced
attendance. Adjusted EBITDAaL margin for the period was
12.7%, a decrease of 1.5% from 14.2% in the prior year period due
to lower exhibition revenues and higher contributions from lower
margin businesses including amusement and leisure.
ADJUSTED FREE CASH FLOW (see Non-GAAP measures section of
this news release)
For the second quarter of 2019, adjusted free cash flow per
common share of Cineplex was $0.78 as
compared to $0.69 in the prior year
period. The declared dividends per common share of Cineplex were
$0.45 in the second quarter of 2019
and $0.43 in the prior year period.
During the 12 months ended June 30,
2019, Cineplex generated adjusted free cash flow per Share
of 2.75, compared to 2.71 in the prior 12 month period. Cineplex
declared dividends per Share of $1.75
and $1.69, respectively, in each 12
month period. The payout ratios for these periods were 63.6% and
62.5%, respectively.
NON-GAAP FINANCIAL MEASURES
EBITDA and Adjusted Free Cash Flow
EBITDA and adjusted free cash flow are not measures recognized
by GAAP and do not have standardized meanings in accordance with
such principles. Therefore, EBITDA and adjusted free cash
flow may not be comparable to similar measures presented by other
issuers. As a result of the adoption of IFRS 16,
Leases on January 1, 2019, new
non-GAAP measures including adjusted EBITDAaL and associated
adjusted EBITDAaL margin have been introduced to ensure
comparability of periods.
EBITDA is calculated by adding back to net income or net loss,
income tax expense, depreciation and amortization expense, and
interest income. Adjusted EBITDA excludes the change in fair
value of financial instrument, loss on disposal of assets, foreign
exchange gain, the equity income of CDCP, the non-controlling
interests' share of adjusted EBITDA of TG-CPX Limited Partnership,
and depreciation, amortization, interest and taxes of Cineplex's
other joint ventures and associates. Adjusted EBITDAaL
modifies adjusted EBITDA to deduct current period cash rent related
to lease obligations. Prior year adjusted EBITDAaL deducts rent
previously recognized as a reduction in finance lease obligations,
and non-cash rent previously presented as amortization of tenant
inducements, rent averaging liabilities, density right and
fair-value lease contract liabilities.
Cineplex's management believes that adjusted EBITDAaL is an
important supplemental measure of Cineplex's profitability at an
operational level and provides analysts and investors with
comparability in evaluating and valuing Cineplex's performance
period over period. EBITDA, adjusted for various unusual
items, is also used to define certain financial covenants in
Cineplex's Credit Facilities. Management calculates adjusted
EBITDAaL margin by dividing adjusted EBITDAaL by total
revenues.
Adjusted free cash flow is a non-GAAP measure generally used by
Canadian corporations, as an indicator of financial performance and
it should not be seen as a measure of liquidity or a substitute for
comparable metrics prepared in accordance with GAAP.
For a detailed reconciliation of net income or net loss to EBITDA,
adjusted EBITDA and adjusted EBITDAaL and from cash provided by
operating activities to adjusted free cash flow, please refer to
Cineplex's management's discussion and analysis filed on
www.sedar.com.
Earnings per Share Metrics
Cineplex has presented
basic and diluted earnings per share net of this item to provide a
more comparable earnings per share metric between the current
periods and prior year periods. In the non-GAAP measure, earnings
is defined as net income or net loss excluding the change in fair
value of financial instrument.
Per Patron Revenue Metrics
Cineplex reviews per patron
metrics as they relate to box office revenue and theatre food
service revenue such as BPP, CPP, BPP excluding premium priced
product, and concession margin per patron, as these are key
measures used by investors to value and assess Cineplex's
performance, and are widely used in the theatre exhibition
industry. Management of Cineplex defines these metrics as
follows:
Theatre Attendance: Theatre attendance is calculated as
the total number of paying patrons that frequent Cineplex's
theatres during the period.
BPP: Calculated as total box office revenues divided by
total paid theatre attendance for the period.
BPP excluding premium priced product: Calculated as total
box office revenues for the period, less box office revenues from
3D, 4DX, UltraAVX, VIP and IMAX product; divided by total paid
theatre attendance for the period, less paid theatre attendance for
3D, 4DX, UltraAVX, VIP and IMAX product.
CPP: Calculated as total theatre food service revenues
divided by total paid total theatre attendance for the period.
Premium priced product: Defined as 3D, 4DX, UltraAVX,
IMAX and VIP film product.
Theatre concession margin per patron: Calculated as total
theatre food service revenues less total theatre food service cost,
divided by theatre attendance for the period.
Same Theatre Analysis
Cineplex reviews and reports
same theatre metrics relating to box office revenues, theatre food
service revenues, theatre rent expense and theatre payroll expense,
as these measures are widely used in the theatre exhibition
industry as well as other retail industries.
Same theatre metrics are calculated by removing the results for
all theatres that have been opened, acquired, closed or otherwise
disposed of subsequent to the start of the prior year comparative
period. For the three and six months ended June 30, 2019 the impact of the five locations
that have been opened or acquired and three locations that have
been closed or otherwise disposed of have been excluded, resulting
in 160 theatres being included in the same theatre metrics.
Cost of sales percentages
Cineplex reviews and reports
cost of sales percentages for its two largest revenue sources, box
office revenues and food service revenues as these measures are
widely used in the theatre exhibition industry. These measures are
reported as film cost percentage and concession cost percentage,
respectively, and are calculated as follows:
Film cost percentage: Calculated as total film cost
expense divided by total box office revenues for the period.
Theatre concession cost percentage: Calculated as total
theatre food service costs divided by total theatre food service
revenues for the period.
The Rec Room food cost percentage: Calculated as
total The Rec Room food costs divided by total The Rec
Room food service revenues for the period.
Non-cash rent
Calculated as the total amortization of
tenant inducements, rent averaging liabilities, density rights and
fair-value lease contract liabilities. This accounting treatment
was applicable under IAS 17 in 2018 but not applicable under IFRS
16 in 2019 and onwards.
Certain information included in this news release contains
forward-looking statements within the meaning of applicable
securities laws. These forward-looking statements include,
among others, statements with respect to Cineplex's objectives,
goals and strategies to achieve those objectives and goals, as well
as statements with respect to Cineplex's beliefs, plans,
objectives, expectations, anticipations, estimates and
intentions. The words "may", "will", "could", "should",
"would", "suspect", "outlook", "believe", "plan", "anticipate",
"estimate", "expect", "intend", "forecast", "objective" and
"continue" (or the negative thereof), and words and expressions of
similar import, are intended to identify forward-looking
statements.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, including those described in
Cineplex's Annual Information Form ("AIF"), Cineplex's management's
discussion and analysis ("MD&A") and in this news
release. Those risks and uncertainties, both general and
specific, give rise to the possibility that predictions, forecasts,
projections and other forward-looking statements will not be
achieved. Certain material factors or assumptions are applied in
making forward-looking statements and actual results may differ
materially from those expressed or implied in such statements.
Cineplex cautions readers not to place undue reliance on these
statements, as a number of important factors, many of which are
beyond Cineplex's control, could cause actual results to differ
materially from the beliefs, plans, objectives, expectations,
anticipations, estimates and intentions expressed in such
forward-looking statements. These factors include, but are not
limited to, risks generally encountered in the relevant industry,
competition, customer, legal, taxation and accounting
matters.
The foregoing list of factors that may affect future results
is not exhaustive. When reviewing Cineplex's forward-looking
statements, readers should carefully consider the foregoing factors
and other uncertainties and potential events. Additional
information about factors that may cause actual results to differ
materially from expectations and about material factors or
assumptions applied in making forward-looking statements may be
found in the "Risks and Uncertainties" section of Cineplex's
MD&A.
Cineplex does not undertake to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
Canadian securities law. Additionally, we undertake no obligation
to comment on analyses, expectations or statements made by third
parties in respect of Cineplex, its financial or operating results
or its securities. All forward-looking statements in this news
release are made as of the date hereof and are qualified by these
cautionary statements. Additional information, including Cineplex's
AIF and MD&A, can be found on SEDAR at www.sedar.com.
About Cineplex
Cineplex (TSX:CGX) is a top-tier
Canadian brand that operates in the Film Entertainment and Content,
Amusement and Leisure, and Media sectors. A leading entertainment
and media company, Cineplex welcomes over 70 million guests
annually through its circuit of theatres and location based
entertainment venues across the country. In addition to being
Canada's largest and most
innovative film exhibitor, Cineplex also operates successful
businesses in digital commerce (CineplexStore.com), food service,
alternative programming (Cineplex Events), cinema media (Cineplex
Media), digital place-based media (Cineplex Digital Media),
amusement solutions (Player One Amusement Group) and an online
esports platform for competitive and passionate gamers (WorldGaming
Network). Additionally, Cineplex operates a location based
entertainment business through Canada's newest destination for 'Eats &
Entertainment' (The Rec Room), and will also be opening new
complexes specially designed for teens and families (Playdium) as
well as exciting new sports and entertainment venues across
Canada (Topgolf). Cineplex is a
joint venture partner in SCENE, Canada's largest entertainment loyalty
program.
Proudly recognized as having one of the country's Most Admired
Corporate Cultures, Cineplex employs approximately 13,000 people in
its offices across Canada and the
United States. To learn more visit Cineplex.com or download
the Cineplex App.
You are cordially invited to participate in a conference call
with the management of Cineplex (TSX: CGX) to review our second
quarter. Ellis Jacob, President
and Chief Executive Officer and Gord Nelson, Chief Financial
Officer, will host the call scheduled for:
Thursday August 8,
2019
10:00 am Eastern
Time
In order to participate in the conference call please dial
647-484-0475, or toll-free from Canada or the U.S. dial 1-888-394-8218 at
least ten minutes prior to 10:00 am
ET. Please quote the conference confirmation code 6219020 to
access the call.
If you cannot participate in a live mode, a replay will be
available. Please dial 647-436-0148, or toll-free from Canada or the U.S. dial 1-888-203-1112. The
replay passcode is 6219020.
The replay will begin at 1:00 pm ET on Thursday August 8, 2019 and end at 1:00 pm ET on
Thursday August 15, 2019.
Note that media will be participating in listen-only mode.
Cineplex Inc.
Interim Condensed Consolidated
Balance Sheets
(Unaudited)
(expressed in
thousands of Canadian dollars)
|
June
30,
|
December
31,
|
|
2019
|
2018
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$
|
32,040
|
$
|
25,242
|
Trade and other
receivables
|
111,986
|
165,586
|
Income taxes
receivable
|
11,501
|
4,944
|
Inventories
|
36,740
|
30,592
|
Prepaid expenses and
other current assets
|
18,740
|
13,862
|
Fair value of interest
rate swap agreements
|
901
|
1,457
|
|
|
|
|
211,908
|
241,683
|
|
|
|
Non-current
assets
|
|
|
Property, equipment and
leaseholds
|
623,746
|
634,354
|
Right-of-use
assets
|
1,286,851
|
—
|
Deferred income
taxes
|
13,656
|
13,444
|
Fair value of interest
rate swap agreements
|
363
|
2,063
|
Interests in joint
ventures and associates
|
33,398
|
38,912
|
Intangible
assets
|
94,399
|
108,758
|
Goodwill
|
816,858
|
817,235
|
|
|
|
|
$
|
3,081,179
|
$
|
1,856,449
|
Cineplex Inc.
Interim Condensed Consolidated
Balance Sheets …
continued
(Unaudited)
(expressed in
thousands of Canadian dollars)
|
June
30,
|
|
December
31,
|
|
2019
|
|
2018
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
174,513
|
|
$
|
186,407
|
Share-based
compensation
|
2,301
|
|
4,862
|
Dividends
payable
|
9,500
|
|
9,183
|
Income taxes
payable
|
518
|
|
12,167
|
Deferred
revenue
|
178,472
|
|
214,016
|
Lease
obligations
|
109,258
|
|
3,058
|
Fair value of interest
rate swap agreements
|
1,782
|
|
1,184
|
|
476,344
|
|
430,877
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Share-based
compensation
|
9,751
|
|
8,210
|
Long-term
debt
|
641,000
|
|
580,000
|
Fair value of interest
rate swap agreements
|
15,539
|
|
7,674
|
Lease
obligations
|
1,289,729
|
|
10,789
|
Post-employment
benefit obligations
|
9,301
|
|
9,250
|
Other
liabilities
|
11,100
|
|
119,110
|
Deferred income
taxes
|
3,679
|
|
11,528
|
|
1,980,099
|
|
746,561
|
Total
liabilities
|
2,456,443
|
|
1,177,438
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share
capital
|
852,379
|
|
852,379
|
Deficit
|
(223,400)
|
|
(179,721)
|
Hedging reserves and
other
|
(12,178)
|
|
(3,678)
|
Contributed
surplus
|
8,608
|
|
7,815
|
Cumulative translation
adjustment
|
(570)
|
|
2,301
|
Total equity
attributable to owners of Cineplex
|
624,839
|
|
679,096
|
Non-controlling
interests
|
(103)
|
|
(85)
|
Total
equity
|
624,736
|
|
679,011
|
|
$
|
3,081,179
|
|
$
|
1,856,449
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Operations
(Unaudited)
(expressed
in thousands of Canadian dollars, except per share amounts)
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
Box office
|
$
|
189,371
|
|
$
|
187,234
|
|
$
|
345,867
|
|
|
$
|
368,614
|
Food
service
|
129,563
|
|
122,270
|
|
232,621
|
|
|
239,218
|
Media
|
49,578
|
|
40,791
|
|
84,591
|
|
|
73,304
|
Amusement
|
58,117
|
|
48,577
|
|
116,617
|
|
|
98,482
|
Other
|
12,616
|
|
10,181
|
|
24,487
|
|
|
20,307
|
|
439,245
|
|
409,053
|
|
804,183
|
|
|
799,925
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Film cost
|
103,005
|
|
102,346
|
|
181,726
|
|
|
197,550
|
Cost of food
service
|
28,247
|
|
25,020
|
|
51,683
|
|
|
49,796
|
Depreciation -
right-of-use assets
|
36,557
|
|
—
|
|
73,019
|
|
|
—
|
Depreciation and
amortization - other assets
|
33,589
|
|
32,260
|
|
66,444
|
|
|
63,454
|
Loss on disposal of
assets
|
116
|
|
640
|
|
593
|
|
|
850
|
Other
costs
|
195,513
|
|
213,772
|
|
380,955
|
|
|
431,226
|
Share of income of
joint ventures and associates
|
(1,643)
|
|
(835)
|
|
(2,012)
|
|
|
(1,732)
|
Interest expense -
lease obligations
|
12,469
|
|
142
|
|
24,689
|
|
|
299
|
Interest expense -
other
|
5,792
|
|
6,443
|
|
11,209
|
|
|
12,770
|
Interest
income
|
(59)
|
|
(58)
|
|
(133)
|
|
|
(145)
|
Foreign
exchange
|
675
|
|
(67)
|
|
1,216
|
|
|
(832)
|
|
414,261
|
|
379,663
|
|
789,389
|
|
|
753,236
|
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
24,984
|
|
29,390
|
|
14,794
|
|
|
46,689
|
Provision for
income taxes
|
|
|
|
|
|
Current
|
7,245
|
|
10,145
|
|
7,653
|
|
|
12,180
|
Deferred
|
(1,658)
|
|
(5,122)
|
|
(4,896)
|
|
|
(5,084)
|
|
5,587
|
|
5,023
|
|
2,757
|
|
|
7,096
|
Net
income
|
$
|
19,397
|
|
$
|
24,367
|
|
$
|
12,037
|
|
|
$
|
39,593
|
Attributable
to:
|
|
|
|
|
|
Owners of
Cineplex
|
$
|
19,405
|
|
$
|
24,367
|
|
$
|
12,055
|
|
|
$
|
39,593
|
Non-controlling
interests
|
(8)
|
|
—
|
|
(18)
|
|
|
—
|
Net
income
|
$
|
19,397
|
|
$
|
24,367
|
|
$
|
12,037
|
|
|
$
|
39,593
|
|
|
|
|
|
|
Basic net income
per share attributable to owners of Cineplex
|
$
|
0.31
|
|
$
|
0.38
|
|
$
|
0.19
|
|
|
$
|
0.63
|
Diluted net income
per share attributable to owners of Cineplex
|
$
|
0.31
|
|
$
|
0.38
|
|
$
|
0.19
|
|
|
$
|
0.63
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Comprehensive
Income
(Unaudited)
(expressed in thousands of
Canadian dollars)
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
19,397
|
|
$
|
24,367
|
|
$
|
12,037
|
|
$
|
39,593
|
|
|
|
|
|
|
|
|
Other
comprehensive (loss) income
|
|
|
|
|
|
|
|
Items that will be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
(Loss) income on
hedging instruments
|
(3,827)
|
|
391
|
|
(11,621)
|
|
1,167
|
Associated deferred
income taxes recovery (expense)
|
1,028
|
|
(107)
|
|
3,121
|
|
(318)
|
Foreign currency
translation adjustment
|
(1,357)
|
|
1,836
|
|
(2,871)
|
|
3,343
|
|
|
|
|
|
|
|
|
Other
comprehensive (loss) income
|
(4,156)
|
|
2,120
|
|
(11,371)
|
|
4,192
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
15,241
|
|
$
|
26,487
|
|
$
|
666
|
|
$
|
43,785
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
Owners of
Cineplex
|
$
|
15,249
|
|
$
|
26,487
|
|
$
|
684
|
|
$
|
43,785
|
Non-controlling
interests
|
(8)
|
|
—
|
|
(18)
|
|
—
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
15,241
|
|
$
|
26,487
|
|
$
|
666
|
|
$
|
43,785
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Changes in
Equity
(Unaudited)
(expressed in thousands of
Canadian dollars)
For the periods ended June 30, 2019 and 2018
|
|
Share
capital
|
|
Contributed
surplus
|
|
Hedging reserves
and other
|
|
Cumulative
translation adjustment
|
|
Deficit
|
|
Non-controlling
interests
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2019
|
|
$
|
852,379
|
|
$
|
7,815
|
|
$
|
(3,678)
|
|
$
|
2,301
|
|
$
|
(179,721)
|
|
$
|
(85)
|
|
$
|
679,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
12,055
|
|
(18)
|
|
12,037
|
Other comprehensive
loss
|
|
—
|
|
—
|
|
(8,500)
|
|
(2,871)
|
|
—
|
|
—
|
|
(11,371)
|
Total
comprehensive income
|
|
—
|
|
—
|
|
(8,500)
|
|
(2,871)
|
|
12,055
|
|
(18)
|
|
666
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(55,734)
|
|
—
|
|
(55,734)
|
Share option
expense
|
|
—
|
|
793
|
|
—
|
|
—
|
|
—
|
|
—
|
|
793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
$
|
852,379
|
|
$
|
8,608
|
|
$
|
(12,178)
|
|
$
|
(570)
|
|
$
|
(223,400)
|
|
$
|
(103)
|
|
$
|
624,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2018
|
|
$
|
856,761
|
|
$
|
1,647
|
|
$
|
1,332
|
|
$
|
(2,817)
|
|
$
|
(148,060)
|
|
$
|
—
|
|
$
|
708,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
39,593
|
|
—
|
|
39,593
|
Other comprehensive
income
|
|
—
|
|
—
|
|
849
|
|
3,343
|
|
—
|
|
—
|
|
4,192
|
Total
comprehensive income
|
|
—
|
|
—
|
|
849
|
|
3,343
|
|
39,593
|
|
—
|
|
43,785
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(53,832)
|
|
—
|
|
(53,832)
|
Share option
expense
|
|
—
|
|
918
|
|
—
|
|
—
|
|
—
|
|
—
|
|
918
|
Issuance of shares on
exercise of options
|
|
74
|
|
(6)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018
|
|
$
|
856,835
|
|
$
|
2,559
|
|
$
|
2,181
|
|
$
|
526
|
|
$
|
(162,299)
|
|
$
|
—
|
|
$
|
699,802
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(expressed
in thousands of Canadian dollars)
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Cash provided by
(used in)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Net income
|
$
|
19,397
|
$
|
24,367
|
|
$
|
12,037
|
$
|
39,593
|
Adjustments to
reconcile net income to net cash provided by
operating activities
|
|
|
|
|
|
Depreciation and
amortization of property, equipment and
leaseholds, and intangible assets
|
33,589
|
32,260
|
|
66,444
|
63,454
|
Depreciation of
right-of-use assets
|
36,557
|
—
|
|
73,019
|
—
|
Amortization of
tenant inducements, rent averaging liabilities
and fair value lease contract liabilities
|
—
|
(3,114)
|
|
—
|
(6,199)
|
Unrealized foreign
exchange
|
325
|
(294)
|
|
754
|
(294)
|
Interest rate swap
agreements - non-cash interest
|
(574)
|
88
|
|
(1,132)
|
208
|
Accretion of
convertible debentures
|
—
|
608
|
|
—
|
1,209
|
Other non-cash
interest
|
291
|
100
|
|
850
|
201
|
Loss on disposal of
assets
|
116
|
640
|
|
593
|
850
|
Deferred income
taxes
|
(1,658)
|
(5,122)
|
|
(4,896)
|
(5,084)
|
Non-cash share-based
compensation
|
404
|
487
|
|
793
|
918
|
Net change in
interests in joint ventures and associates
|
(1,403)
|
(424)
|
|
(3,089)
|
(1,629)
|
Changes in operating
assets and liabilities
|
(29,550)
|
(20,679)
|
|
(27,299)
|
(19,760)
|
Net cash provided by
operating activities
|
57,494
|
28,917
|
|
118,074
|
73,467
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Proceeds from
disposal of assets
|
—
|
1,604
|
|
—
|
1,786
|
Purchases of
property, equipment and leaseholds
|
(27,667)
|
(29,480)
|
|
(60,029)
|
(54,991)
|
Intangible assets
additions
|
(1,305)
|
(1,013)
|
|
(2,917)
|
(2,368)
|
Tenant
inducements
|
734
|
6,372
|
|
1,349
|
8,248
|
Net cash received
from CDCP
|
3,128
|
292
|
|
8,602
|
976
|
Net cash used in
investing activities
|
(25,110)
|
(22,225)
|
|
(52,995)
|
(46,349)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Dividends
paid
|
(27,867)
|
(26,916)
|
|
(55,417)
|
(53,515)
|
Borrowings under
credit facilities, net
|
35,000
|
15,000
|
|
61,000
|
21,000
|
Options exercised for
cash
|
—
|
68
|
|
—
|
68
|
Repayments of lease
obligations - principal
|
(31,580)
|
(847)
|
|
(64,064)
|
(1,679)
|
Financing
fees
|
—
|
—
|
|
(243)
|
—
|
Net cash used in
financing activities
|
(24,447)
|
(12,695)
|
|
(58,724)
|
(34,126)
|
|
|
|
|
|
|
Effect of exchange
rate differences on cash
|
226
|
589
|
|
443
|
535
|
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents
|
8,163
|
(5,414)
|
|
6,798
|
(6,473)
|
|
|
|
|
|
|
Cash and cash
equivalents - Beginning of period
|
23,877
|
39,538
|
|
25,242
|
40,597
|
Cash and cash
equivalents - End of period
|
$
|
32,040
|
$
|
34,124
|
|
$
|
32,040
|
$
|
34,124
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
Cash paid for
interest - lease obligation
|
$
|
12,204
|
$
|
142
|
|
$
|
23,891
|
$
|
299
|
Cash paid for
interest - other
|
$
|
6,367
|
$
|
4,334
|
|
$
|
12,262
|
$
|
11,107
|
Cash paid for income
taxes, net
|
$
|
8,227
|
$
|
10,970
|
|
$
|
26,088
|
$
|
18,042
|
Cineplex Inc.
Interim Consolidated Supplemental
Information
(Unaudited)
(expressed in thousands
of Canadian dollars)
Reconciliation to Adjusted
EBITDAaL
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Net
income
|
$
|
19,397
|
$
|
24,367
|
|
$
|
12,037
|
$
|
39,593
|
|
|
|
|
|
|
Depreciation and
amortization - other
|
33,589
|
32,260
|
|
66,444
|
63,454
|
Depreciation -
right-of-use assets
|
36,557
|
—
|
|
73,019
|
—
|
Interest expense -
lease obligations
|
12,469
|
—
|
|
24,689
|
—
|
Interest expense -
other
|
5,792
|
6,585
|
|
11,209
|
13,069
|
Interest
income
|
(59)
|
(58)
|
|
(133)
|
(145)
|
Current income tax
expense
|
7,245
|
10,145
|
|
7,653
|
12,180
|
Deferred income tax
recovery
|
(1,658)
|
(5,122)
|
|
(4,896)
|
(5,084)
|
|
|
|
|
|
|
EBITDA
|
$
|
113,332
|
$
|
68,177
|
|
$
|
190,022
|
$
|
123,067
|
|
|
|
|
|
|
Loss on disposal of
assets
|
116
|
640
|
|
593
|
850
|
CDCP equity income
(i)
|
(1,917)
|
(926)
|
|
(2,234)
|
(1,744)
|
Foreign exchange loss
(gain)
|
675
|
(67)
|
|
1,216
|
(832)
|
Non-controlling
interest
|
7
|
—
|
|
18
|
—
|
Depreciation and
amortization - joint ventures and associates (ii)
|
24
|
3
|
|
53
|
5
|
Taxes and interest of
joint ventures and associates (ii)
|
12
|
13
|
|
23
|
26
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
112,249
|
$
|
67,840
|
|
$
|
189,691
|
$
|
121,372
|
|
|
|
|
|
|
Cash rent related to
lease obligation (iii)
|
(43,784)
|
—
|
|
(87,955)
|
—
|
Cash rent paid not
pertaining to current period
|
(353)
|
—
|
|
707
|
—
|
Cash rent previously
recognized as a finance lease (iv)
|
—
|
(989)
|
|
—
|
(1,978)
|
Non-cash rent (v)
(vi)
|
—
|
(3,114)
|
|
—
|
(6,199)
|
|
|
|
|
|
|
Adjusted EBITDAaL
(vi) (vii)
|
$
|
68,112
|
$
|
63,737
|
|
$
|
102,443
|
$
|
113,195
|
(i)
|
CDCP equity income
not included in adjusted EBITDA as CDCP is a limited-life financing
vehicle that is funded by virtual print fees collected from
distributors.
|
(ii)
|
Includes the joint
ventures and associates with the exception of CDCP (see (i)
above).
|
(iii)
|
Balance of cash rents
that have been reallocated to offset the lease
obligations.
|
(iv)
|
Rent payments that
were charged to the finance lease obligations in the previous
reporting period. See IFRS 16 reconciliation section of the
MD&A for further details.
|
(v)
|
Non-cash rent
included in the 2018 balances in the previous reporting period. See
IFRS 16 reconciliation section of the MD&A for further
details.
|
(vi)
|
See Non-GAAP
measures section of this news release.
|
(vii)
|
Prior period figures
have been revised to conform to current period presentation. See
IFRS 16 reconciliation section of the MD&A for further
details.
|
Cineplex Inc.
Interim Consolidated Supplemental
Information
(Unaudited)
(expressed in thousands
of Canadian dollars, except number of shares and per share
data)
Adjusted Free Cash Flow
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
|
|
|
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
Cash provided by
operating activities (i)
|
$
|
57,494
|
$
|
28,917
|
|
$
|
118,074
|
$
|
73,467
|
Less: Total capital
expenditures net of proceeds on sale of assets
|
(27,667)
|
(27,876)
|
|
(60,029)
|
(53,205)
|
|
|
|
|
|
|
Standardized free
cash flow
|
29,827
|
1,041
|
|
58,045
|
20,262
|
|
|
|
|
|
|
Add/(Less):
|
|
|
|
|
|
Changes in operating
assets and liabilities (ii)
|
29,550
|
20,679
|
|
27,299
|
19,760
|
Changes in operating
assets and liabilities of joint ventures and associates
(ii)
|
(240)
|
(411)
|
|
1,077
|
(103)
|
Principal component
of lease obligations
|
(31,580)
|
(847)
|
|
(64,064)
|
(1,679)
|
Principal portion of
cash rent paid not pertaining to current period
|
(346)
|
—
|
|
691
|
—
|
Growth capital
expenditures and other (iii)
|
19,191
|
22,923
|
|
46,883
|
42,965
|
Share of income of
joint ventures and associates, net of non-cash
depreciation
|
(238)
|
(75)
|
|
(146)
|
19
|
Non-controlling
interest
|
7
|
—
|
|
18
|
—
|
Net cash received
from CDCP (iv)
|
3,128
|
292
|
|
8,602
|
976
|
Adjusted free cash
flow
|
$
|
49,299
|
$
|
43,602
|
|
$
|
78,405
|
$
|
82,200
|
|
|
|
|
|
|
Average number of
Shares outstanding
|
63,333,238
|
63,332,067
|
|
63,333,238
|
63,331,261
|
|
|
|
|
|
|
Adjusted free cash
flow per Share
|
$
|
0.778
|
$
|
0.688
|
|
$
|
1.238
|
$
|
1.298
|
Dividends
declared
|
$
|
0.445
|
$
|
0.430
|
|
$
|
0.880
|
$
|
0.850
|
(i)
|
Prior period figures
have been revised to conform to current period presentation. See
IFRS 16 reconciliation section of the MD&A for further
details.
|
(ii)
|
Changes in operating
assets and liabilities are not considered a source or use of
adjusted free cash flow.
|
(iii)
|
Growth capital
expenditures and other represent expenditures on Board approved
projects, exclude maintenance capital expenditures, and
are
|
|
net of proceeds on
asset sales. Cineplex's revolving facility is available to
fund Board approved projects.
|
(iv)
|
Excludes the share of
income of CDCP, as CDCP is a limited-life financing vehicle funded
by virtual print fees collected from distributors.
|
|
Cash invested into
CDCP, as well as cash distributions received from CDCP, are
considered to be uses and sources of adjusted free cash
flow.
|
SOURCE Cineplex